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May I ask - If I try and find GOLD in my backyard.. Does that count as a lottery ? I mean, we could all go out into our gardens, (if you have one), and dig a big hole and look for Gold. If you find some.. YOU WIN! I had to buy a shovel to play.
Depends on where the gold comes from. As long as the guy who sold you the shovel didn't put the gold in some shovel buyer's gardens and not others, it's not a lottery. |
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I'm not a lawyer, but I think even I could win that argument. Heck, I found this definition in your own link: "Consideration may include a fee, a product purchase requirement, or the requirement that the entrant expend extensive time or effort." None of the costs you mention could ever be claimed to be a fee for participation in a lottery, IMO. Legally the Bitcoin miner entry requirement of owning or renting a computer to calculate trial crypto blocks constitutes "consideration". You think a Monarch (or similar) running for 10 minutes and generating 700,000,000,000 * 60 * 10 = 42 trillion perfectly valid crypto blocks that get dumped just for not having an arbitrary pattern of X leading zeros isn't a requirement that the entrant expend extensive time or effort? If I enter a free raffle at the church ... bitcoin is not a legal entity or company... Legally irrelevant. There is no one compelling me to spend a penny.... Agreed. But you are aware that the Bitcoin "system" offers a "prize" for participation as a miner and there is no way you can compete to generate a valid Bitcoin block and win that prize without spending money - equipment purchase, cloud rental, whatever. As soon as you spend such money with the intent of generating the winning block in a ten-minute Bitcoin lottery, you have accepted the terms of the Bitcoin lottery of your own volition. For me the strongest argument is that you are the only person making this claim. No court has said anything like this nor is there a president you point too. I have spoken to multiple accountants with experience in crypt-currency and never even heard of this?
Everybody hears of something the first time from somebody: http://xkcd.com/1053/Here's who's also hearing about this for the first time besides you: http://www.naag.org/naag/attorneys-general/whos-my-ag.php |
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As for the topic at hand. I think that yes, he does have some credit to his argument. Thank you. However, you could make the claim that Bitcoin DOES operate like stock in a company (that seems to be how many people use it in trade), but that the company is a decentralized network. Thus the concept of the DAC. And as we all know, the stock market in and of itself is very much like a gaming set up. What draws the difference between the two?
A stock market is just a meeting place that charges a fee or rent for allowing two parties to meet and negotiate a legal contract to exchange two assets. Nobody is excluded from the transaction by a "chance" element, and the exchange of two equal-values assets at the time of transfer is not the awarding of a "prize". AFTER the transaction is concluded, SUBSEQUENT ELEMENTS determine if you made a good trade ("win" or "lose") - NOT your counterparty or your exchange. Bitcoin is a lottery. Stock markets are not a lottery. |
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US Banks are conducting a lottery under your interpretation of law. They receive interest as a prize for payment processing. Incorrect. I agree that banks do receive interest as a fee or "prize" for payment processing. However, they do not randomly select who gets payment processing and who does not - there is no "chance" selection of customers. Everybody who submits a request for payment gets equal service. No element of "chance", no lottery. The real argument is Consideration. In legal theory, "Consideration" does not apply since no one is purchasing from the one running this lottery. Incorrect. Consideration is not about a "player" (mining) OBTAINING something of value from a "lottery runner" (Bitcoin). Consideration is about the "lottery runner" (Bitcoin) RECEIVING something of value from the "player" (miner) - namely, the addition of a block to the blockchain from a single miner that it designates as a ten-minute "winner". Thank you for thinking this through instead of just insulting me. You will eventually conclude that legally I am right, as uncomfortable as that will be to admit. |
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you have to understand the U.S is not the WORLD. Miners will move out of the US and go elsewhere
stick your head out of your small intestine you scum. (you must be a lawyer)
US law can and does confiscate money generated in violation of its laws elsewhere in the world. Just ask online poker players. Mainstream acceptance of Bitcoin in the US economy (especially by vendors and businesses) will be hamstrung by this fact as it becomes more widely realized. Every government in the world taxes gaming, which is why there are gaming control laws in the first place. Why am I scum for pointing out the law where it is currently being ignored? Am I scum for pointing out that you cannot legally murder me to shut me up? Open your mind to things you don't want to hear. It can be a very educational experience. |
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Here is the original intent from the Whitepaper, as to your "Prize" argument. "6. Incentive
By convention, the first transaction in a block is a special transaction that starts a new coin owned
by the creator of the block. This adds an incentive for nodes to support the network, and provides
a way to initially distribute coins into circulation, since there is no central authority to issue them.
The steady addition of a constant of amount of new coins is analogous to gold miners expending
resources to add gold to circulation. In our case, it is CPU time and electricity that is expended.
The incentive can also be funded with transaction fees. If the output value of a transaction is
less than its input value, the difference is a transaction fee that is added to the incentive value of
the block containing the transaction. Once a predetermined number of coins have entered
circulation, the incentive can transition entirely to transaction fees and be completely inflation
free.
The incentive may help encourage nodes to stay honest. If a greedy attacker is able to
assemble more CPU power than all the honest nodes, he would have to choose between using it
to defraud people by stealing back his payments, or using it to generate new coins. He ought to
find it more profitable to play by the rules, such rules that favour him with more new coins than
everyone else combined, than to undermine the system and the validity of his own wealth."
https://bitcoin.org/bitcoin.pdfIt is a means to secure the network. Not a "prize" or "reward" and that is the end game. In a lottery, the " "prize" or "reward" is the point. Its a game of chance. Bitcoin isn't a game of chance, but intended to be a payment network that is still in its early stages. You are misconstruing Bitcoins intent and objective, in order to fit into gaming law. I agree the intent and objective of mining is to secure the network. However, you can have noble intent and objective and still be in violation of the law by your choice of method to achieve your objective. If you secure the blockchain with the efforts of volunteers who personally pay for a small number of very cheap Raspberry Pi 2 computers that do block crypto computing, and personally receive nothing in return for providing that service other than a civic sense of participation, then you are meeting the law because you are not providing a "prize". If you offer 50 / 25 / whatever bitcoins every ten minutes that are ultimately intended to be sold off and pay for $350 million in infrastructure, $550 million per year in electricity, and a huge ASIC mining arms race, then you are providing a "prize". If that prize is distributed by "chance" (ie, your block has X leading zeros, congrats!) then you are running a lottery and you are in violation of US State gaming laws. Intent and objective are not relevant here, prize is. Only if miners mine for free without receiving a prize via chance will they be legal. |
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If you don't have to pay to get in then it's not a lottery. I suppose you could call it a contest, but there is nothing wagered like a lottery. I doubt any court would find otherwise. You do not understand the legal definition of "consideration" in this context. You have to pay to buy the mining computer, and electricity to run it, which is your "entry fee" for the Bitcoin lottery. The value of that entry fee flows to "Bitcoin" as a "consideration" when you calculate a block to be added to its blockchain - a function vital to the continuation of Bitcoin. If Bitcoin used every single block generated by all miners, it would be "buying" a "service" and would be a business. Instead, a random chance function (leading zeros in the block) is used to award a prize to one single block winner every ten minutes. All other blocks generated by all other losers (which are cryptographically valid but lack the winning zeros) are discarded. I know it's uncomfortable to acknowledge that Bitcoin mining is a lottery, but legally it is. Protests to the contrary, or silence so far on this point from State law enforcement or courts, are irrelevant. Favorable federal legal rulings so far from IRS or DOJ are also irrelevant, since gaming law is handled on a State level. So far the States have yet to speak up on this point of law - Bitcoin as an illegal lottery. It will not be a good day for Bitcoin when they do. |
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I literally stopped reading here. How do you come up with such crap?
Read more than the first two sentences and see. The references and calculations supporting my claims are clearly stated. |
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i think the OP is mad that a friend of his told him he can make lots of money... Nope. I've made my share of profit on Bitcoin. But I hear the music stopping and I see how few chairs are out there. Don't you? I laugh that the OP's narrow mindedness As I shake my head sadly at yours. |
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1. Bitcoin mining is a service not a lottery. Miners work for a living. Actually, the "service" that miners "do" is legally considered to be the "consideration" part of the lottery known as Bitcoin. Bottom line, it is working and continues to grow. Something that has consumed hundreds of millions of dollars fielding hundreds of thousands of useless computers only to lose 75% of its value in the past 15 months is not "working" or "growing". It's a burst bubble. |
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Here we go again. Another thread dedicated to FUD.  Facts...(and)...Unwelcome...Data |
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The four strikes against Bitcoin: First, Bitcoin mining is illegal. Do the research, bitcoin mining has all the legal elements of prize, chance, and consideration which makes it a lottery (see for example http://www.blankrome.com/index.cfm?contentID=37&itemID=2300 ).The mining computers necessary for Bitcoin's ongoing operation are legally no different than networked slot machines under US State laws. Instead of "three cherries", your mining rig is trying to produce via a random process a "crypto hash" with a set number of continuous zeros. Hey, who cares that your winning computed crypto "hash" file is no better whatsoever in supporting Bitcoin holders / the blockchain than the trillon trillion other valid crypto hash files calculated and immediately tossed in the trash by losers. Be the first to calculate a valid crypto "hash" solution that ALSO coincidentally contains an irrelevant bunch of leading zeros and win a prize! Running a bitcoin mining operation in the US as an individual or business entity is an illegal lottery and its proceeds (mined Bitcoins) are subject to confiscation at any time by State Attorney Generals. Their press release could come at any time... Second, current bitcoin mining exponential growth is unsustainable. The key graph at https://blockchain.info/charts/hash-rate?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address shows that mining Bitcoin currently takes 300,000,000+ GHash / sec of computer power to keep this ponzi scheme going. Take for example a modern mining rig like a Butterfly Labs Monarch ( http://www.butterflylabs.com/monarch/ ) that costs $850 and uses 490W to produce 700 GH/sec of hash power for mining Bitcoins. If the entire Bitcoin mining ecosystem were Monarchs (which it isn't, it is a mix of equipment mostly less efficent and already obsolete compared to Monarchs), then there's 300,000,000 / 700 = 428,571 Monarchs out there at an installed infrastructure cost of 428,571 * 850 = $364 million dollars. This installed base of mining computers currently generate 25 Bitcoins / hit * 6 hits / hour * 24 hours / day = 3600 Bitcoins / day (currently worth $244 each at this writing, see http://coinmarketcap.com ) for a total of $878,400 per day. If Bitcoin rates were roughly stable (ha!) this would be around $320 million per year. The average annual return on a mining rig is thus currently below its average cost so the current Bitcoin mining ASIC arms race and its exponential growth cannot be funded. That's why the super-mining union CEX.io has already pulled out: http://www.coindesk.com/cloud-mining-suffers-hash-rate-plateaus/Third, Bitcoin mining is hugely wasteful and inefficent. There's only 6 * 24 * 365 = 52,560 winners per year in the Bitcoin lottery that injects new coins into the Bitcoin ecosystem (inflation!). With 500,000+ mining computers out there, 90+% of them will run all year and never get a hit, all the while sucking up at least 500,000 * 850 = 425,000 KWh per hour of electricity. At 15 cents per KWh average, the current Bitcoin system is burning at least $64,000 per hour / $560 million per year in electricity. Finally, Bitcoin mining is unnecessary. Instead of 500,000+ competing "Proof of Work" (PoW) mining computers in the back room supporting Bitcoin behind the scenes, second-generation cooperative "Proof of Stake" (PoS) cryptocurrencies like the pioneering NXT can field the infrastructure necessary to support a vast population of coin holders with only a tiny network of a few hundred $35 10W Raspberry Pi 2 toy educational computers ( http://www.raspberrypi.org/raspberry-pi-2-on-sale/ ). Such PoS networks cooperate solely to support coin owners instead of primarily competing for miner prizes, making them far more cost-effective and efficent. Bitcoin is a dinosaur that cannot evolve to achieve this crucial advantage. Bottom line: The current Bitcoin system has at least $364 million in sunk infrastructure costs and burns at least $560 million a year in power. The ONLY source of "income" to support this burden is (1) appreciation of the existing 13.8 million Bitcoins and (2) mining of 1.3 million new Bitcoins per year. Do the math - these numbers just don't add up to a stable system that's gonna work. Four strikes, and Bitcoin's out. |
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